Government’s plan to finance the budget deficit through releasing investment bonds on the Namibia Stock Exchange (NSX) seem to be paying off so far after raising N$7b, a recent market update by the NSX confirms.
The bonds being dispatched with a repayment period of between five to 10 years will mature as from 2015 to 2030 and are coded between GC2012 and GC2030, (Government code 2012 to Government code 2030).
Government needs to raise about N$11 billion before the end of the year to compensate for the overspending plan released by the Minister of Finance, Saara Kuugongelwa-Amadhila earlier in the year when she announced Namibia’s 2011 expenditure plan.
Treasury is also expected to solicit more money to clamp down on the reasonably high budget deficit from borrowing on the international market with plans already underway to raise between N$400m to N$500m through that source.
Other than soliciting investor money through bonds, the Government has also introduced different tax regimes in the mining sector to improve value addition and cut down on heavy exportation of raw materials and capital exportation by multinationals.
The Bank of Namibia Governor, Ipumbu Shiimi, confirmed that Government will continue with its plan to sell bonds on both the domestic and international markets while looking for alternative borrowing options.
According to the NSX, the highest interest maturity attained by the Government bonds on the market so far has been 11%.
Namibia recorded a budget deficit for the first time in three years after the introduction of a largely expansionary budget that gave birth to the N$14b unemployment combating facility, Targeted Intervention Programme for Economic and Employment (TIPEEG) creation.
TIPEEG focuses on the expansion of the tourism, agriculture and infrastructure development
Government is also looking to raise more money in October on the international market when they hit the London Stock Exchange and the South African Stock Exchange targeting close to N$11b.
The bonds are also bench-marked to the South African bonds market rate.
Most of the investment bonds are being sold with a maturity rate of between 8 to 10% and will mature from 2012 and 2030 with a reasonable return for the investors.